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Jobs Report Reflects Bigger Problems: Opinion

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- The economy added only 120,000 jobs in March -- not even enough to keep up with normal population growth. The unemployment rate fell to 8.2%, but only because many unemployed adults became discouraged and quit looking for work.

Fourth-quarter economic growth was exceptionally strong as the global economy recovered from first-half disruptions such as the earthquake in Japan, but first quarter growth has been slower. Construction -- both commercial and single-unit residential -- has been hard hit, and now auto sales are slipping.

Manufacturing added 37,000 jobs, but that sector's strong recovery should be generating more gains. Elsewhere, jobs gains were weak and generally down from February.

Outside the auto patch, assembly work remains handicapped by the exchange rate of the Chinese yuan. And concerns about the durability of the recovery and health care costs when Obamacare is fully implemented make employers very cautious about adding to payrolls.

Overall, the situation with the yuan is the single largest impediment to more robust growth in manufacturing and its broader multiplier effects for the rest of the economy. The Obama Administration indicated it has no intention of challenging China on this issue, but presumptive GOP standard bearer Mitt Romney promises a harder line.

Government employment fell by 1,000 as private-sector jobs added 121,000. Lower property values translate into lower assessments with considerable lag in most communities, and in 2012 and 2013, the housing recession will significantly impact local tax receipts and employment. Coupled with federal budget cutbacks, government employment should continue falling.

In the months ahead, gains in core private-sector employment must improve dramatically if the economy is to halt the decline in real wages and provide federal, state and local governments with adequate revenues.

The economic crisis in Europe and mounting problems in China's housing sector and banks are causing U.S. businesses to worry about a second major recession and are discouraging new hiring. The U.S. economy continues to expand but is quite vulnerable to shock waves from crises in European and Asia.

Factoring in those discouraged adults and others working part time for lack of full-time opportunities, the unemployment rate is about 14.5%. Adding college graduates in low-skill positions, such as baristas at Starbucks(SBUX) , and the unemployment rate is likely closer to 18%.